2016 Las Vegas Stock Recap

With the calendar now showing January 2017, let's take a look back and see how Las Vegas stocks did in 2016.

The big three Las Vegas stocks - MGM Resorts International, Wynn Resorts, and Las Vegas Sands all had good years increasing by more than 20% each. The companies rode the wave of a recovering Macau market combined with strong non-gaming Las Vegas metrics.

In Macau Wynn Palace opened on the Cotai Strip in August. Sands opened The Parisian a few weeks later in in September. Meanwhile in the United States MGM National Harbor near Washington DC was opened in December to capacity crowds.

Caesars Entertainment stock finished the year up just over 7%. Caesars is still involved in seemingly never-ending bankruptcy litigation, but the stock could have some speculation value if they are able to escape bankruptcy with most of the company still in-tact.

Regional operators Boyd Gaming and Penn National didn't fare as well as their international counterparts. Boyd was up a slight 1.5% as they integrated their new Aliante and Cannery acquisitions. Penn was down 13.9% perhaps negatively affected by the anticipated opening of MGM National Harbor stealing business from their Charles Town property.

2016 Las Vegas stock results: (not including dividends)

Company	Symbol	Start	End	Change
MGM	MGM	22.72	28.83	+26.9%
Wynn	WYNN	69.19	86.51	+25%
Sands	LVS	43.84	53.41	+21.8%
Caesars	CZR	7.89	8.50	+7.7%
Boyd	BYD	19.87	20.17	+1.5%
Penn	PENN	16.02	13.79	-13.9%

Robert Irvine Restaurant coming to Tropicana

Celebrity chef Robert Irvine best known for his Food Network shows Dinner Impossible and Restaurant Impossible will be opening a restaurant at Tropicana in 2017.

Irvine announced the restaurant at a press conference earlier this evening. In true Vegas style he arrived by repelling down the building at Tropicana.

Parent company Penn National has planned improvements for Tropicana since purchasing the resort last year. Having a well known celebrity chef should breathe some life into the property and help to turn around anemic results.

Penn National is a relative unknown in Las Vegas, but they are an established gaming operator with casinos throughout the country. With their acquisition of M Resort in 2011 and now with their purchase of Tropicana they are slowly building a Las Vegas presence.

With Caesars Entertainment in bankruptcy and MGM Resorts doing things to upset their customers I think Penn National could have an opportunity to pick up some market share. I expect Penn to keep expanding their Las Vegas profile in the coming years.

Tropicana to Improve Anemic Results

New Tropicana owners Penn National Gaming reported their fourth quarter 2015 earnings yesterday. During the earnings conference call several minutes were devoted to talking about Tropicana and what the company will be doing to improve "anemic" gaming results at the property.

Several of the initiatives revolve around bringing Penn's regional gambling customers to Las Vegas and having them stay at play at Tropicana. In an era where other companies are forgetting about gamblers, it seems like Penn National knows where its bread is buttered and is ready to welcome gamblers into their newly acquired property.

Penn National COO Jay Snowden talked about Tropicana on the earnings conference call:

"We made significant progress on continuing to improve the overall gaming experience by upgrading the slot and table game offerings at Tropicana Las Vegas in the fourth quarter. We continue to right-size the cost structure of course, and prepare for our second quarter launch of the Marquee Rewards program at Tropicana Las Vegas. So, I don't think it's a surprise to anyone - our current gaming business volumes are still anemic at this point but we anticipate some real acceleration in the second half of the year once our regional database customers start to fill those hotel rooms."

"Now conversely the non-gaming trends at the Tropicana like the rest of the Strip operators in the fourth quarter were very strong. We're forecasting some strength year-over-year in our group convention business. Occupancy rates, ADR all look encouraging in the first quarter of 2016 as well - so no doubt we're benefiting from the rising tide effect in Las Vegas until we get everything else where it needs to be from an offering perspective at Tropicana."

"When we acquired this property close to 50% of the business was coming from wholesale or online travel agency bookings - that's down now closer to 40%. We envision taking that down to as close to zero as we can. 10-15% is probably the sweet spot for some weekday softness periods, but we're going to be looking to move that business aside as we bring our database customers in and still have plenty of room for the other 50% plus of the rooms to go towards strong cash ADR's of group business, convention business, transient customers. That's what we're seeing strength in right now - we've got plenty of rooms to accommodate those customers as well as our gaming customers."

November 2015 Las Vegas Stock Recap

With the calendar now showing December 2015, let's take a look back and see how Las Vegas stocks did in the month of November.

After a blazing hot October for Las Vegas stocks, they came back down to earth a little bit in November.

Caesars Entertainment was the only stock finishing up in November, inching up a little over 5% after soaring over 36% in October.

MGM Resorts International and Boyd Gaming were relatively flat in October, both declining slightly.

Wynn Resorts and Las Vegas Sands both were both down a little over 10% in November after both had a strong October. Some issues in Macau continue to weigh on these two operators.

Penn National was down almost 11% in November, after having the weakest performance of all the Las Vegas stocks in October. I'm guessing their master lease accounting issues could have hurt their stock price recently.

Company	Symbol	Start	End	Change
Caesars	CZR	8.05	8.47	+5.22%
MGM	MGM	23.19	22.74	-1.94%
Boyd	BYD	19.99	19.59	-2%
Wynn	WYNN	69.95	62.77	-10.26%
Penn	PENN	17.86	15.95	-10.69%
Sands	LVS	49.51	44.06	-11%

Fontainebleau For Sale - Who Will Buy?

The Wall Street Journal reported today that Carl Icahn is looking to sell the Fontainebleau. The property will be listed by CBRE for $650 million.

I immediately starting thinking about who might be a candidate to buy and finish the stalled Fontainebleau project. I'm going to spend the rest of this blog post speculating about which companies might be in the mix.

MGM Resorts International and Caesars Entertainment are the two largest Las Vegas hotel/casino companies but neither of them are really looking to expand in Vegas at the moment. Plus MGM will be completing a REIT conversion soon, and Caesars is going through a partial bankruptcy. I don't see either of these giants buying Fontainebleau.

Wynn Resorts boss Steve Wynn has long said he doesn't want to build in Las Vegas again. His frustration with the Macau government and endless headaches getting his Boston project off the ground might have him singing a different tune though. The rub: Wynn likes to build from scratch and the Fontainebleau structure might not be a blank enough slate for architect DeRuyter Butler and designer Roger Thomas to work their magic.

Like Wynn, Las Vegas Sands and Sheldon Adelson have shown a lack of interest in building anything new in Vegas. I actually think the Fontainebleau would be a great fit though. LVS has deep pockets so finishing the resort wouldn't be a problem, and the location near the planned convention center expansion would fit right in with their convention heavy business model. The best part: They could call the property Sands Hotel and Casino resurrecting an iconic Las Vegas brand.

Speaking of iconic properties: Boyd Gaming has been looking to get back on the Strip ever since they demolished The Stardust and failed to replace it with Echelon Place, later selling the property. While I would be in favor of Boyd buying Fontainebleau and renaming it The Stardust (or Borgata Las Vegas perhaps?) it seems unlikely they would undertake such a large project so shortly after abandoning Echelon.

Penn National was seriously considering purchasing Fontainebleau before ultimately losing out to Carl Icahn. Since then they have entered the Las Vegas market with purchases of M Resort and later Tropicana. If Penn was unwilling to spend $150 million to buy Fontainebleau in 2010 I'm guessing they don't want to spend $650 million in 2015.

Treasure Island owner Phil Ruffin was in the news earlier this week as it was reported he made a recent $1.3 billion failed bid to buy The Mirage. If Ruffin has that much cash to spend could he possibly want to buy the Fontainebleau? It seems like a real possibility to me.

Other regional operators like Eldorado Resorts, Golden Entertainment, Full House Resorts, and Pinnacle Entertainment are likely eager to get into the Las Vegas market but probably don't have the money to make a deal like Fontainebleau happen. Could one of these companies partner up with a rich benefactor like Ruffin to get it done?

Lastly and perhaps most likely to buy Fontainebleau are private equity real estate companies. Cosmopolitan parent company Blackstone might be a possibility if they are looking to expand their casino holdings. Once rumored Mirage buyer Starwood Capital might also be looking to buy.

October 2015 Las Vegas Stock Recap

With the calendar now showing November 2015, let's take a look back and see how Las Vegas stocks did in the month of October.

October turned out to be an amazing month for Las Vegas stock returns with every stock I track finishing green, and 5 out of the 6 finishing up by more than 20%.

Caesars Entertainment has been on a wild bankruptcy fueled roller coaster ride. After soaring an incredible 83.3% in August they came crashing back down to earth in September falling 38.32% only to turn it around again in October jumping up 36.67%.

Wynn Resorts and Las Vegas Sands both were up big in October after declining significantly in September. While Steve Wynn was angry at the Macau government during Wynn's earnings call, Sheldon Aldelson was nothing but respectful.

MGM Resorts International had a 25% gain in October highlighted by the news that they are creating a REIT called MGM Growth Properties.

Boyd Gaming rode the downtown Las Vegas success wave with their stock increasing almost 22% in October.

Penn National was "only" up 6.4% in October. I'm guessing their limited exposure to Las Vegas compared to the other stocks kept them form having the same explosive October results.

Company	Symbol	Start	End	Change
Caesars	CZR	5.89	8.05	+36.67%
Wynn	WYNN	53.12	69.95	+31.68%
Sands	LVS	37.95	49.51	+30.46%
MGM	MGM	18.45	23.19	+25.69%
Boyd	BYD	16.30	19.99	+21.96%
Penn	PENN	16.78	17.86	+6.44%

MGM Growth Properties REIT Announced

MGM Resorts International reported third quarter 2015 results earlier today. While the numbers were good, especially in Las Vegas, the big news was MGM's announcement that they are creating a REIT.

MGM Growth Properties (MGP) will consist of seven Las Vegas properties (Mandalay Bay, The Mirage, Monte Carlo, New York-New York, Luxor, Excalibur, and The Park) along with three regional properties (MGM Grand Detroit, Beau Rivage in Biloxi, and Gold Strike Tunica).

Notably excluded from the REIT are Bellagio, MGM Grand, and Circus Circus along with MGM's joint ventures including CityCenter, MGM China, Borgata, and the new Las Vegas Arena.

The parent company MGM Resorts International will own approximately 70% of the REIT. This is a big difference from the Penn National / Gaming and Leisure Properties REIT conversion from a few years ago which resulted in a complete and total split of those two companies.

Keeping 70% of the REIT will give MGM more control, but will also limit the potential sale price of the planned MGP IPO which will supposedly take place early in 2016 (that timetable seems ambitious).

Further tampering the REIT's potential is the $4 billion of debt which will be piled on to MGP's books. There are definitely questions about whether the ten properties included in the transaction can generate enough income to support that kind of debt.

Gaming Roundup - Studio City Macau Opens

Studio City in Macau has opened. The 3 plus billion dollar hotel designed in part to bring more non-gaming amenities to Macau features a batman ride and a figure eight ferris wheel in the middle of the building.

Studio City should be a good barometer of how non-gaming attractions do in the Macau market, especially since the government only granted them 250 tables.

Next door to Studio City on the Cotai Strip is The Parisian. The 2.7 billion dollar Las Vegas Sands owned hotel and casino will open in late 2016 or early 2017. It was originally planned for a spring 2016 opening so it's being pushed back a bit.

Back here stateside Caesars Entertainment is halfheartedly trying to sell their bankrupt CEOC unit, but it appears there aren't any bidders likely because Total Rewards would be excluded from the transaction.

Boyd Gaming, Penn National, and Eldorado Resorts all reported earnings within the past few days. All three locals operators seem to be doing well growing EBITDA, but I like net income better which seems to be hard to come by.

September 2015 Las Vegas Stock Recap

With the calendar now showing October 2015, let's take a look back and see how Las Vegas stocks did in the month of September.

Boyd Gaming was the only stock I track that was up in September. It's performance was likely buoyed by strong trends in downtown and the Las Vegas locals market.

Penn National was brought down by the rest of the sector, but since they don't have any international exposure they weren't down as much as the others.

MGM Resorts International was down almost ten percent. Their exciting upcoming projects including the Las Vegas Arena and The Park were overshadowed by their exposure to Macau, which was weak.

Las Vegas Sands and Wynn Resorts both declined significantly again in September. Along with general softness in Macau, reports of troubles in the high end junket market has sent these two stocks into a tailspin.

Caesars Entertainment was the big winner in August soaring an incredible 83.3%. They came crashing back down to earth in September though falling 38.32%. The Caesars bankruptcy proceedings are very uncertain at this point, and it looks like investors are becoming less certain of a turnaround.

Company	Symbol	Start	End	Change
Boyd	BYD	16.10	16.30	+1.24%
Penn	PENN	18.16	16.78	-7.60%
MGM	MGM	20.43	18.45	-9.69%
Sands	LVS	46.23	37.95	-17.91%
Wynn	WYNN	75.05	53.12	-29.22%
Caesars	CZR	9.55	5.89	-38.32%

August 2015 Las Vegas Stock Recap

With the calendar now showing September 2015, let's take a look back and see how Las Vegas stocks did in the month of August.

Caesars Entertainment was the big winner in August soaring an incredible 83.3%. They had a strong earnings report combined with some positive bankruptcy news. Caesars stock is highly speculative given their possible bankruptcy, but those willing to gamble reaped the rewards in August.

MGM Resorts International also reported solid earnings, and their stock was up on the news that they are strongly considering a REIT conversion.

Penn National officially became the owners of the Tropicana, but their stock was down slightly in August. Fellow regional player Boyd Gaming was also down.

Las Vegas Sands and Wynn Resorts both declined significantly in August as they were affected by the Chinese stock market.

Company	Symbol	Start	End	Change
Caesars	CZR	5.21	9.55	+83.30%
MGM	MGM	19.62	20.43	+4.13%
Penn	PENN	19.08	18.16	-4.82%
Boyd	BYD	17.09	16.10	-5.79%
Sands	LVS	56.04	46.23	-17.51%
Wynn	WYNN	103.23	75.05	-27.30%

Las Vegas Stocks Fall in Global Selloff

In what has been dubbed on Twitter as Black Monday - stocks were down in a big way today as China fears caused a global selloff. The Dow, NASDAQ, and S&P 500 all fell by more than 3.5% on the day.

The big Las Vegas stocks were hard hit as they rely on the China economy in their Macau operations. Wynn Resorts fell almost 6.5%, MGM Resorts International was down 5% and Las Vegas Sands was off by 4%.

Even the regional gaming companies without China operations were affected by the selloff. Boyd Gaming was down by 3.3% and Penn National fell by just over 2.5%.

Caesars Entertainment bucked the trend however as they were up almost 12% on favorable bankruptcy news and good Atlantic City numbers. The fact that Caesars doesn't have any Macau operations also probably helped on this particular day.

Company	Symbol	Open	Close	Change
Caesars	CZR	8.02	8.98	+11.97%
Penn	PENN	17.69	17.20	-2.55%
Boyd	BYD	16.03	15.50	-3.31%
Sands	LVS	47.99	46.05	-4.04%
MGM	MGM	20.59	19.54	-5.10%
Wynn	WYNN	81.77	76.48	-6.47%%

July 2015 Las Vegas Stock Recap

With the calendar now showing August 2015, let's take a look back and see how Las Vegas stocks did in the month of July.

Boyd Gaming increased by almost 15 percent as the company reported strong second quarter earnings.

MGM Resorts International had a very eventful July. They first sold Circus Circus Reno and Silver Legacy to Eldorado Resorts. Then came the news that showtimes were being cut at the Mirage Volcano. The bombshell came when it was reported The Mirage was sold to Starwood Capital. All of this resulted in a 7.5 percent increase to the stock price. It should get even more interesting when MGM reports earnings next week.

Las Vegas Sands reported strong Las Vegas trends in the face of a stabilizing Macau market.

Wynn Resorts stock was up almost five percent on their second quarter earnings report. The earnings conference call got interesting as Steve Wynn talked about lowering craps odds to 2X.

Penn National had another good month, up almost four percent. Along with reporting strong earnings, Penn has plans for the Tropicana which could include the potential for a new hotel tower in the future.

July was a roller coaster ride for Caesars Entertainment. The month started out with Gary Loveman officially being replaced as CEO by Mark Frissora. Later in the month the company's stock jumped up 22% in one day on positive bankruptcy news only to fall 40% the very next day on negative news. The end result was the stock down fifteen percent in July. Next week could be even more volatile as Caesars reports earnings and Frissora has his first conference call.

Company	Symbol	Start	End	Change
Boyd	BYD	14.95	17.09	+14.31%
MGM	MGM	18.25	19.62	+7.51%
Sands	LVS	52.57	56.04	+6.6%
Wynn	WYNN	98.67	103.23	+4.62%
Penn	PENN	18.35	19.08	+3.98%
Caesars	CZR	6.12	5.21	-14.87%

July 2015 Business News Roundup

With earnings season in full swing on Wall Street there were a few notable bits of Las Vegas business news this week.

Nevada regulators approved the merger of Lakes Entertainment and Golden Gaming. The combined company will be called Golden Entertainment and will be publicly traded. Golden currently operates in Nevada owning a few casinos in Pahrump along with taverns and slot machines located in grocery stores and other businesses. Lakes owns the Rocky Gap resort in Maryland.

Boyd Gaming reported second quarter 2015 earnings. Their Las Vegas properties had solid results. Las Vegas Locals revenue was up 3.21% from the second quarter last year, and Downtown was up 5.19%. Boyd stock was flat today on the news.

Las Vegas based Pinnacle Entertainment agreed to sell its real estate to Gaming and Leisure Properties (GLPI). Under this arraingement Pinnacle will continue to operate their resort properties while paying rent to GLPI. Penn National has a similar arrangement, as GLPI was split out from that company a few years ago.

In case you missed them earlier this week also check out my blog posts about Las Vegas Sands earnings and Penn National's plans for Tropicana.

Penn National plans for Tropicana

Penn National has a two-phase plan for Tropicana which was revealed in their latest earnings release earlier today.

Phase one involves integrating Penn's Marquee Rewards loyalty program at the property along with some other small improvements.

Phase two is more exciting with the potential for new restaurants, entertainment and even a new hotel tower. All of that will be based on customer demand though, so a major hotel expansion would likely be years down the road - if it ever happens.

Tropicana plans from the Penn National Second Quarter 2015 earnings release:

With our $360 million acquisition of Tropicana Las Vegas scheduled to close later this year, we will have achieved a key strategic objective to identify the right resort at a reasonable cost of entry on the Las Vegas Strip to unleash the significant potential of our database of nearly 3 million active customers. Tropicana Las Vegas, which recently underwent more than $200 million in facility upgrades, presents a tremendous opportunity to drive increased visitation to a premier Strip property, while at the same time allowing us to strengthen our competitive position in our regional gaming markets.

Penn National has developed a two-phase plan to realize the full value of this transaction, which we expect to implement over the next three to five years. In the first phase, we intend to invest approximately $20 million in additional facility improvements and integration activities, including upgrading the existing technology infrastructure to integrate Penn National's nationwide player loyalty program, Marquee Rewards. In the second phase, we intend to evaluate other potential facility enhancements at the property, such as the addition of retail offerings, food and beverage outlets, additional hotel rooms and enhanced entertainment offerings. The scope, budget and timing of any such expansion and improvements will be determined based upon Penn National's early operation of the property and customer feedback for additional amenities.

June 2015 Las Vegas Stock Recap

With the calendar now showing July 2015, let's take a look back and see how Las Vegas stocks did in the month of June.

Penn National had a good month, up 10%. The Tropicana's new owners experienced strong regional gaming, especially at their new Massachusetts property.

Boyd experienced a slight uptick as the Las Vegas locals market shows some signs of improvement.

Las Vegas Sands was up slightly despite an uncertain Macau market, which sent Wynn Resorts down slightly.

MGM Resorts International dropped almost 9%, in part because of the death of Kirk Kerkorian, and the news that his estate will be selling off their stake in the company.

The big loser in June was Caesars Entertainment, down almost 35% on bankruptcy fears.

Company	Symbol	Start	End	Change
Penn	PENN	16.63	18.35	+10.34%
Boyd	BYD	14.31	14.95	+4.47%
Sands	LVS	50.83	52.57	+3.42%
Wynn	WYNN	100.69	98.67	-2.01%
MGM	MGM	20.05	18.25	-8.98%
Caesars	CZR	9.36	6.12	-34.62%

Penn National Buying M Resort

Penn National has bought the M Resort's debt, paving the way for the company to take ownership control of the casino. The Pennsylvania based company paid $230.5 million for about $860 million of total outstanding debt.

Penn National has been looking to get into the Las Vegas market for a few years now. They own 23 casinos around the country, so they have a pretty big customer base to lure to a Vegas property. M Resort is probably a good place to get their feet wet in Las Vegas, especially considering they are getting a brand new property for a fraction of the building cost.

Penn was a player in the auction to buy the stalled Fontainebleau project, but backed off in the later stages giving the property to Carl Ichan. They have also been long rumored to buy the Rio, but nothing ever came of that either.

While the M Resort is a good start, there is little doubt that Penn National would like to have a property on the Strip. Perhaps they will look to expand further into Las Vegas after they fully acquire M Resort. Who knows, maybe they will end up with Fontainebleau after all in a few years when Ichan decides to unload it. M Resort and a finished Fontainebleau would be a really nice foundation for Penn National to build on in the Las Vegas market.

Source: Bloomberg.

For Sale Sign in front of Rio

The ownership of the Rio All-Suite Hotel could be changing hands soon.

The Harrah's owned Rio has been rumored to be on the selling block for some time now. I remember hearing that Penn National wanted to buy it a few months ago.

Now Starwood and Colony Capital seem to be the main bidders according to Bloomberg Businessweek. The property is estimated to be worth about $500 million.

Harrah's has a huge about of debt, but that didn't stop them from acquiring Planet Hollywood recently. I'm guessing that now that they have another strip property, they want to pay down that debt a little bit, and the off strip Rio has become expendable.